batteries

Article
Economics of Residential Photovoltaic Battery
Systems in Germany: The Case of Tesla’s Powerwall
Cong Nam Truong *, Maik Naumann, Ralph Ch. Karl, Marcus Müller, Andreas Jossen
and Holger C. Hesse
Institute for Electrical Energy Storage Technology, Technical University of Munich (TUM), Arcisstr. 21,
80333 Munich, Germany; maik.naumann@tum.de (M.N.); karl@tum.de (R.C.K.);
marcus.mueller@tum.de (M.M.); andreas.jossen@tum.de (A.J.); holger.hesse@tum.de (H.C.H.)
* Correspondence: nam.truong@tum.de; Tel.: +49-89-289-26963; Fax: +49-89-289-26968

Academic Editor: Maciej Swierczynski

Received: 8 February 2016; Accepted: 26 April 2016; Published: 11 May 2016

Abstract: Residential photovoltaic (PV) battery systems increase households’ electricity

self-consumption using rooftop PV systems and thus reduce the electricity bill. High investment
costs of battery systems, however, prevent positive financial returns for most present residential
battery installations in Germany. Tesla Motors, Inc. (Palo Alto, CA, USA) announced a novel battery
system—the Powerwall—for only about 25% of the current German average market price. According
to Tesla’s CEO Elon Musk, Germany is one of the key markets for their product. He has, however,
not given numbers to support his statement. In this paper, we analyze the economic benefit of the
Powerwall for end-users with respect to various influencing parameters: electricity price, aging
characteristics of the batteries, topology of battery system coupling, subsidy schemes, and retrofitting
of existing PV systems. Simulations show that three key-factors strongly influence economics: the
price gap between electricity price and remuneration rate, the battery system’s investment cost, and
the usable battery capacity. We reveal under which conditions a positive return on invest can be
achieved and outline that the Powerwall could be a worthwhile investment in multiple, but not all,
scenarios investigated. Resulting trends are generally transferrable to other home storage products.

Keywords: energy storage; home storage; lithium-ion; self-consumption; stationary energy storage;
storage cost

1. Introduction
Residential battery energy storage systems (BESS) to increase the self-consumption of rooftop
photovoltaic (PV) installations remain economically unfavorable for the German market under almost
all conditions; considering battery prices of 2015, the savings of such systems under German market
conditions commonly cannot surpass the battery investment cost within the estimated system lifetime
as of now [1,2].
In spring 2015, Tesla Motors, Inc. (Palo Alto, CA, USA) announced the Powerwall, a BESS
developed for residential PV-systems, surprising the renewable energy industry and gaining attention
in the media. The technical specifications are similar to previous lithium-ion battery systems, but the
announced system cost is significantly below the market prices of the time. The average retail price in
the German market in the first half of 2015 was about 2,000 EUR/kWh [3]. The price of the Powerwall
in Germany was announced to be about 500 EUR/kWh [4], reducing the specific price by a factor of
four compared to previous average price for lithium-ion based systems. It, however, remained vague
as to what exactly was included in the announced price.

Batteries 2016, 2, 14; doi:10.3390/batteries2020014 www.mdpi.com/journal/batteries

Batteries 2016, 2, 14 2 of 17

Tesla’s CEO Elon Musk claimed during the launch event that Germany is one of the key target
markets to sell their BESS [4]. He suggests that regulations and market are favorable for the product,
however, no supporting numbers were mentioned.
Rough estimations of the Powerwall's economic benefits have been undertaken for selected
regions and market settings [5–8]. However, multiple influencing factors—such as battery aging and
variation of parameters—have not been considered in detail. As such, these studies cannot be used to
judge the system’s financial benefit for a given residential customer in Germany.
In this work, the economic benefit of a system with technical data based on Tesla’s announcements
regarding the Powerwall is assessed for the German market. The aim is to give a reliable evaluation of
Tesla’s Powerwall and to estimate the conditions under which the storage systems become financially
favorable. The results are likewise applicable to other residential BESS with similar price and technical
parameters. Tesla’s product is a mere, yet well-known, example to analyze the economics of BESS for
residential PV-systems.
This paper is organized as follows: Section 2 depicts the technical data of the analyzed BESS
and the households; Section 3 describes the simulation model; Section 4 outlines the assumptions
and scenarios investigated; Section 5 illustrates and discusses the simulation results; and Section 6
summarizes the findings and gives an outlook for future work.

2. Technical Data of the Powerwall and the Simulated Households

We use a proprietary power flow simulation model, implemented and run in Matlab R2015b,
to assess the technical and economic outcome of a residential PV-battery system [1]. The model is
described in Section 3. The simulation model is run with parameter sets matching typical single-family
houses in Germany with a rooftop PV-system installation. Simulated PV-system size ranges from
1 kWp to 10 kWp, which is considered the most likely scenario-range for a combined installation with
small scale BESS like the discussed system [9]. PV-systems with sizes above 10 kWp operate under
different economic framework conditions in Germany [10] and are not considered in this work.
The average consumption of four- and six-person households is 4300 kWh and 4750 kWh,
respectively, per year [11]. However, households with more than average power load are found
to be more likely to invest in PV-systems and BESS to reduce their dependency on the grid-electricity
price [3]. In order to cover all relevant consumption scenarios, simulations are run with a scaled annual
consumption from 1000 kWh to 10,000 kWh. The in-depth analysis is conducted for two specific
household configurations.
The load profile utilized for the simulation consists of 15-min-mean-values of the average of
about 100 measured households in Germany over a year [12]. Consequently, fast load variations
and prolonged periods without major electricity use (for example, during holidays of individual
households), are not captured. The generation profile has been measured with a sample time of one
minute at a PV-system in Munich, Germany, in 2009. Both profiles are scaled to match the PV-system’s
peak power and annual consumption of the household respectively.
Two models of Tesla’s Powerwall are currently promoted: a 6.4 kWh version for residential PV
system integration suitable for daily cycling applications and a 10 kWh version for backup power [4].
The Powerwall as it is can be connected to the AC-side of the household power system, using
a separate inverter at additional cost for the battery link (Figure 1a). It is also feasible to couple the
BESS directly to the PV-system on the direct current (DC) side of the PV-inverter that converts DC into
alternating current (AC) for the household’s usage (Figure 1b) [2]. The system simulation takes into
account efficiency losses of all components depicted, according to the respective topology shown in
Figure 1.
As Tesla claims that no maintenance is required after the system is in operation, no operational
costs are considered in the cost calculations throughout the storage lifetime. The battery capacity is
guaranteed to retain at least 60% after 10 years [4]. Our simulation include the battery’s capacity fade;
we do, however, not consider the replacement of the battery after the warranty period in contrast to
Batteries 2016,
Batteries 2, 2,
2016, 1414 3 of3 17
of 17

contrast to previous work [1] to avoid additional complexity and distraction from the core results. It
previous work [1]
is important to to avoid
note thatadditional
a system complexity andthe
lifetime below distraction
assumedfrom the core
20 years results.
corrupts theIt achievable
is important
to note that a system
savings of the BESS.lifetime below the assumed 20 years corrupts the achievable savings of the BESS.

Household Household
PPV Pgrid PPV PPVES Pgrid
~ Grid ~
PV-panels MPPT PV-inverter Pload PV-panels MPPT PV-inverter Pload Grid

Load Load
PBatt PBESS PBatt
ESS ~ ESS
Powerwall Battery-
inverter Powerwall

(a) (b)

Figure 1. Illustration of the coupling-topologies of the battery energy storage systems (BESS): (a)
Figure 1. Illustration of the coupling-topologies of the battery energy storage systems (BESS):
alternating current (AC)-coupling of battery systems; and (b) direct current (DC)-coupling of battery
(a) alternating current (AC)-coupling of battery systems; and (b) direct current (DC)-coupling of
systems.
battery systems.
3. Simulation Model and Economic Calculation
3. Simulation Model and Economic Calculation
The simulation model computes the power flow between solar generation (PPV), household load
The
(Pload), simulation
BESS (PBatt) model
and the computes the powergrid
public electricity flow(Pbetween solar generation
Grid), considering inverter (P PV ), household
efficiency (ηinv) andload
(Pload ), BESS
battery (PBatt ) and
round-trip the public
efficiency (ηBatt) electricity
as well as the gridaging
(PGridrelated
), considering inverter
capacity fade efficiency
of storage. The(η inv ) and
sample
battery round-trip
time (Δt) betweenefficiency (ηBatt ) steps
the simulation as well(k)asis the aging
5 min. The related capacity
simulation fade
is run forofthe
storage.
whole The sample
regarded
period
time to explicitly
(∆t) between capture the
the simulation effect
steps (k) isof5 min.
battery
Thedegradation
simulation is onruntheforsystem
the wholeperformance and
regarded period
consequently
to explicitly the generated
capture the effect savings.
of battery degradation on the system performance and consequently the
generated Thesavings.
modeled system equations for AC-coupled devices are given below. The power values are
calculated
The modeledin watts,
system energies
equations are forconsidered
AC-coupled in watt-seconds,
devices are given the state
below.of The
charge
power (SOC) andare
values
efficiencies are calculated in per unit values between 0 and 1. P BESS is the input power of the inverter.
calculated in watts, energies are considered in watt-seconds, the state of charge (SOC) and efficiencies
areSOC describes
calculated in the
per state of charge
unit values of the 0device’s
between and 1. battery.
PBESS isSelf-discharge
the input power of lithium-ion batteries
of the inverter. SOC
typically ranges around a few percent per month [13] and is thus neglected
describes the state of charge of the device’s battery. Self-discharge of lithium-ion batteries typicallyin our calculations. The
battery energy capacity (cBatt) does not remain constant, but continuously decreases over time
ranges around a few percent per month [13] and is thus neglected in our calculations. The battery
because of aging effects.
energy capacity (cBatt ) does not remain constant, but continuously decreases over time because of
aging effects. ( )= ( )− ( )− ( ) (1)
Pgrid pkq “ P
( ) = ηPV ⋅ pkq ´ P(load pkq
) for ´ P pkq
( )≥0
BESS (1)
(2)
PBatt pkq( “
)= ηinv ¨ ⋅PBESS pkq for PBESS pkq
( ) for ( )ě<0 (2)
PBatt pkq “ η1 ¨ PBESS pkq for PBESS pkq ă 0
inv
⋅ ( )
( ) =?η ¨P pkq ⋅ Δ + ( − 1) for ( )≥0
SOC pkq “ Batt Batt
CBatt ¨ ∆t ` SOC pk ´ 1q for PBatt pkq ě 0 (3)
( ) (3)
SOC pkq( “
) =? PBatt pkq ¨ ⋅∆t
⋅
ηBatt ¨CBatt
Δ `+SOC (pk −
´ 1) for PBatt (pkq) <
1q for ă 00

With
With constraints:
constraints:
SOCmin ď≤SOC ď≤SOCmax (4) (4)
| ≤Prated,Powerwall
|P|Batt | ď , (5) (5)
|P|BESS | |ď≤Prated,Inverter
, (6) (6)

TheThe implemented
implemented “greedy”
“greedy” control
control algorithm
algorithm of theof the BESS-model
BESS-model is setthe
is set to store toPV-generated
store the
PV-generated surplus energy and to release it, as soon as the household load exceeds
surplus energy and to release it, as soon as the household load exceeds the PV-system’s generation: the
PV-system’s generation:
PBESS,ref pkq “ PPV pkq
( )´−Pload (pkq) (7)
, ( )= (7)
Batteries 2016, 2, 14 4 of 17

In case of DC-coupled systems, the equations are slightly different because of the different
topology and power conversions. The power output at the PV-inverter is now labeled as PPVES .
The following equations are used for this topology:

Pgrid pkq “ PPVES pkq ´ Pload pkq (8)

PPVES pkq “ ηinv ¨ pPPV pkq ´ PBatt pkqq for PPV pkq ´ PBatt pkq ě 0
(9)
PPVES pkq “ η1 ¨ pPPV pkq ´ PBatt pkqq for PPV pkq ´ PBatt pkq ă 0
inv
?
ηBatt ¨ PBatt pkq
SOC pkq “ CBatt ¨ ∆t ` SOC pk ´ 1q for PBatt pkq ě 0
PBatt pkq (10)
SOC pkq “ ?η ¨C ¨ ∆t ` SOC pk ´ 1q for PBatt pkq ă 0
Batt Batt

with constraints:
SOCmin ď SOC ď SOCmax (11)

|PBatt | ď Prated,Powerwall (12)

0 ď PPVES ď PPV,peak (13)

The formulation of the implemented control algorithm for the DC-coupled storage system slightly
changes, yet the system essentially behaves the same way:

PPVES,ref “ Pload (14)

Both models always operate within the constraints regardless of the reference values. The SOC
limits are:
SOCmin “ 0; SOCmax “ 1 (15)

The SOC limits seem optimistic, however, limiting the SOC to common values requires utilization
of the unknown rated energy capacity instead of the specified usable energy capacity of 6.4 kWh.
The assumptions regarding the SOC limits are very pessimistic regarding the aging of the battery.
The round-trip efficiency (ηBatt ) of the Powerwall amounts to 92.5% on average [4]. We assume
that the charging and discharging efficiencies are equivalent. The inverter efficiency depends on the
output power and is implemented for both coupling-topologies in the same manner:
ˆ ˙
Pout p
ηinv “ f p“ “ (16)
Prated,inverter kp2 ` p ` p0

with the following parameters:

k “ 0.0345; p0 “ 0.0072 (17)

The inverter is modeled with a power dependent efficiency curve in Euqation (16) with parameters
in Euqation (17) as provided by Notton et al. [14]. As such, the inverter’s efficiency remains above 90%
for an output power load of about 10% to 100% of the rated power. However, output power below
10% results in significantly lower efficiencies.
In this work we consider the capacity fade caused by mechanical and electro-chemical
aging mechanisms, in contrast to the majority of publications about economics of energy storage
systems [15–17]. The overall system’s performance varies during the simulated operation period, as it
is strongly affected by battery aging. Our battery aging model adjusts the capacity of the simulated
residential BESS continuously with respect to simulation time passed and the battery’s load. Efficiency
degradation is not included in the aging model. A self-developed cycle-counting approach is used
to determine the stress put on the battery. This method stems from the materials science, where
material-fatigue is defined as the weakening of material due to repeatedly applied mechanical stress.
Experimentally gained Wöhler-curves (also referred to as S/N-curves) describe the amount of stress
cycles related to the applied force onto the material, until it fails [18].
Batteries 2016, 2, 14 5 of 17

We adapted this method to estimate cycle aging of batteries based on findings in literatures [19–24].
Assuming independency of calendric and cycle aging, a superposition approach to account for both
simultaneous aging effects is used. Cyclization-caused degradation depends only on the inflicted stress
on the battery; the aging progress itself does not influence the aging speed, hence time-dependency is
neglected in the system simulation.
The depth of cycle (DOC) describes the amplitude between the peak and the minimum state
of-charge within a cycle and determines the cycle-aging. The cycle-counting algorithm detects
half-cycles. These are distinguished between charging, discharging, and resting periods of the batteries.
The cycle-counter determines the cycles by detecting zero-crossing of the battery terminal power-flow.
Every time the power-flow changes to zero, the end of a half-cycle is declared and the difference of the
SOC at the beginning and at the end of the detected cycle is calculated in order to obtain the DOC.
According to a model provided by Rosenkranz et al. [25], smaller DOCs lead to reduced aging
when compared to large DOCs. We scaled this model curve to attain 5000 full cycles for the battery
with a capacity degradation to 80% of its initial value, as announced for the Powerwall product [26].
The cycle aging parameters are given in Table 1. The respective amount of equivalent full cycles for
each occurring DOC is obtained with piecewise cubic interpolation of the given parameter set.

Table 1. Parameters of aging model. Amount of equivalent full cycles with according depth of cycle
(DOC) until capacity degrades to 80%.

DOC/% 2.5 5 10 25 50 80 100

Full equivalent cycles Reference aging 30,800 19,800 14,500 9500 6900 5500 5000
until 80% capacity
Strong aging 18,500 11,900 8700 5700 4100 3300 3000

The capacity degradation due to calendric aging (∆Ccal ) and the degradation caused by cycling
(∆Ccyc ) depend on the time period (tcalendric ) until 20% of the capacity is diminished just by calendric
aging and the amount of equivalent full cycles (kcycle ) until the battery degrades by 20% of its capacity:

1
∆Ccal “ 0.2 ¨ Cbatt ¨ (18)
tcalendric

1
∆Ccyc “ 0.2 ¨ Cbatt ¨ (19)
kcycle pDOCq ¨ DOC
For the economic calculations, all future cash flows (CF) are discounted with a fixed interest rate
(i) to estimate the net present value (NPV). The NPV of the initial investment cost of the BESS (Cinvest ),
electricity purchase cost (Cenergy ), feed-in remuneration (Rremun ), and subsidies (Rsubsidy ) are taken into
account. The entire discounted value of the system is then compared to a PV-system without a BESS to
elucidate the financial benefit (Rsavings ) of storage installation at the residential site. PV-system costs
are not included, as they are equal in both cases.
ÿ
NPV “ CF ptq ¨ p1 ` iq´t (20)
t“years

´ ¯ ` ˘
Rsavings “ ´Cenergy ` Rremun ´ Cinvest ` Rsubsidy ´ ´Cenergy,noBESS ` Rremun,noBESS (21)

The key performance indicator is the return on investment (ROI) of the total savings’ NPV in
relation to the initial investment costs of BESS. We choose a depreciation period of 20 years for BESS,
equivalent to the endorsed depreciation period for PV-systems [27], an interest rate of 4% p.a., and
an inflation rate of 2% p.a., being in the same range as other publications [28–31].

Rsavings
ROI “ (22)
Cinvest
Batteries 2016, 2, 14 6 of 17

4. Scenarios and Assumptions

The most significant parameters (electricity price, household size, remuneration rate, subsidies,
coupling-topology, and aging characteristics) are varied in order to cover the most likely range of the
BESS’ value.

4.1. Electricity Price Development

Given the fact that future electricity price development depends on numerous unpredictable
factors like the costs of electricity generation, carbon emission trading price, and further aspects of the
economic and regulatory framework, two border scenarios are considered herein for the next 20 years:

(1) Constant electricity price: an electricity price of 28.72 ct/kWh over the whole period of time.
(2) Rising electricity price: an annual price increase of 4.55% p.a. starting with 28.72 ct/kWh.

The first scenario with a constant electricity price refers to a constant nominal electricity price
and results in overall decreasing real electricity costs considering the effects of inflation. The chosen
price is equivalent to the average electricity price for private households in 2015 [32]. The second
extreme scenario considers a rising electricity price based on an extrapolation of the average annual
price increase of the historic electricity price development from 2000 to 2014 [33].

4.2. Household Size

Two reference households are discussed in detail:

(1) Average household: annual load of 4500 kWh and a PV-facility with 5 kWp installed power.
(2) Large household: annual load of 7000 kWh and a PV-facility with 8 kWp installed power.

The annual load of the average household represents the average four- to six-person household
with the most common PV-system size of 5 kWp in Germany [34].
The large household has a larger annual load than the German average of four- to six-person
households. However, a large share of households that consider the purchase of a BESS share this
trait [3]. This household is assumed to have a PV-system of 8 kWp installed on the roof, the second
most common PV-system size, within the investigated range [34].

4.3. Coupling of Battery Energy Storage Systems

Two coupling topologies to equip a rooftop-PV-system with a BESS are investigated here:

(1) DC-coupling: installation of BESS without additional inverter (Figure 1a).

(2) AC-coupling: coupling the BESS to the AC-side of the house with an inverter (Figure 1b).

DC-coupling is possible with the Powerwall. Retrofitting existing PV-systems with a BESS in this
way, however, would require a rewiring of the system [2]. The official price of the Powerwall is given
with 3,615 EUR incl. value-added tax (VAT) without installation cost [4]. An additional 1,385 EUR is
estimated for the installation, sales margin, and additional control devices—as such, a total price of
5,000 EUR is used for the system cost.
AC-coupling: coupling the BESS to the AC-side of the household (Figure 1b) is more flexible
for existing PV-systems, but requires an additional inverter. Several publications suggest a specific
inverter price of 350 EUR/kW for micro-inverters [33,35,36]. We consider the inverter with a total
price of 1,250 EUR, hence the whole price for AC-coupling amounts to 6,250 EUR in our calculation.
After considering the auxiliary costs, the whole system price of the Powerwall results in specific
prices of 781.25 EUR/kWh and 976.56 EUR/kWh with our assumptions. These are significantly higher
than the initially announced prices.
Batteries 2016, 2, 14 7 of 17

4.4. Battery Aging Parameters

We employ two aging characteristics in our simulation:

(1) Reference aging: the battery’s capacity degrades to 80% of its initial value after 5000 full cycles.
(2) Strong aging: the battery’s capacity degrades to 80% of its initial value after 3000 full cycles.

Reference aging: the degradation curve given by Rosenkranz et al. [25] is scaled to match 5000 full
cycles for the aging computation in agreement to Tesla’s announcement.
Strong aging: a scaling to match 3000 cycles is added to show the sensitivity of aging to economic
value generation. As such we can estimate the economic impact if the Powerwall were to degrade
prematurely to 80% of its initial capacity.
The amount of full equivalent cycles dependent on the DOC for the chosen aging characteristics is
given in Table 1. Smaller DOCs allow for more equivalent full cycles, hence larger energy throughput
until the same degradation is reached.
The calendric-aging is assumed with 15 years to 80% remaining capacity, according to our in-house
experiments with batteries of the same chemistry as used in the Powerwall (Table 2).

Table 2. Powerwall device data according to Tesla and assumptions used in the paper.

Name Value Unit

Usable energy capacity 6.4 kWh
Rated Power 3.3 kW
Roundtrip efficiency (battery system only) 92.5 %
Battery chemistry Nickel manganese cobalt oxide (NMC) -
Time period until 80% capacity 15 Years
Full cycles until 80% capacity 5000 Cycles
Price 3,615 EUR

4.5. Battery Storage Subsidies

We take into account the current regulations in Germany, including a subsidy for BESS that
requires a stricter limit of the in-feed power of the installed PV-system capacity, such as the former
subsidy granted by the KfW-Bank [37]. The subsidy program is announced to be continued in 2016 with
renewed conditions. We assume a subsidy scheme with 30% funding of BESS including installation
and a feed-in limit of 50%. The assumed feed-in limit is stricter than the requirement of the former
KfW-subsidy. Other subsidy schemes related to PV-systems however impose feed-in limits of 50% and
even 30% depending on the system setup [38]. The calculations are conducted for two cases:

(1) Subsidy: the subsidy worth 30% of the investment costs is considered in the cost calculation, while
its imposed constraints on the system are included in the simulation.
(2) No subsidy: the subsidy value is neglected for the cost calculation. The current “Erneuerbare-
Energien-Gesetz” (EEG) 2014 legal limit of 70% feed-in power for new PV-systems is included in
the simulation.

Several feed-in limits imposed by subsidy schemes for the BESS are simulated to investigate their
impact on the economics. These lower limits reduce the feed-in peak power, thus supporting grid
stability but they also lead to additional curtailment losses compared to the effective limit of 70% of the
installed PV-system size. The cost of additional curtailment losses (Ccurtailment ) comprises of the increase
of the losses (Ecurtailment ) that cannot be fed into the grid and the remuneration rate (rremuneration ):

Ccurtailment “ Ecurtailment ¨ rremuneration (23)

Batteries 2016, 2, 14 8 of 17

4.6. Simultaneous Installation and Retrofitting of Photovoltaic-Systems

The savings on the electricity bill that a residential BESS generates by increasing the
self-consumption depend on the electricity price and the remuneration rate for feed-in energy. The latter
is determined by the stated rate at the point of time the PV-system is installed. Each PV-facility installed
is granted a fixed remuneration rate for 20 years according to Germany’s EEG law regulations [10,39].
This basically serves as a subsidy for the operation of PV-systems. We investigate the following
installation scenarios for the BESS:

(1) Initial installation: a PV-system installed in 2016 together with the BESS and receiving a guaranteed
remuneration rate of 12.31 ct/kWh for in-feed energy until the end of the depreciation time.
(2) Retrofit installation: a PV-system installed in 2000, retrofitted with the BESS in 2020, receiving
an average remuneration rate of 3.21 ct/kWh.

In the retrofit installation case, we extrapolate to a storage usage period from 2020 to 2040, since
the remuneration rate of 50.62 ct/kWh for PV-installations of the year 2000 is still in effect until the end
of 2019. As long as the electricity price is below the remuneration rate, operating the BESS to increase
self-consumption causes financial harm. In order to enable a comparison of this scenario, we assume
the same electricity prices. Hence the assumption in this scenario differs from the reference only in
terms of the remuneration rate for the in-fed electricity. We assume a selling price of 3.21 ct/kWh for
surplus PV-power fed into the grid after the expiry of the guaranteed EEG remuneration rate. This rate
is based on the average electricity price of 3.21 ct/kWh in the time period of January 2015 to September
2015 at the EPEX-SPOT day-ahead market [40].
The simulation is run for different constraints regarding the feed-in power limit. Systems that
operate under the conditions of the anticipated subsidy limit the feed-in power to 50% of the installed
PV-system peak power in the reference scenario. A PV-system installed in 2016 without the subsidy
is obliged to limit the feed-in power to 70% of its peak power [10]. PV-systems installed in 2000 are
neither eligible for the subsidy nor subject to feed-in limits.
Table 2 shows the technical specifications of the smaller Powerwall version analyzed in this work
and includes assumptions regarding the device.
Table 3 outlines the electricity price scenarios for each investigated parameter set, and the two
example households that are investigated in detail.

Table 3. Reference households and electricity price assumptions analyzed. PV: photovoltaic.

Name Variant 1 Variant 2

Electricity price Constant 28.72 ct/kWh
Consumption of 4500 kWh/a with
Reference household parameters
a 5 kWp PV-system
28.72 ct/kWh in 2016 with 4.55%
increase p.a.
Consumption of 7000 kWh/a with
a 8 kWp PV-system

The reference scenario for the sensitivity parameters is given in Table 4 along with the alternative
parameter variants.

Table 4. Overview of the reference scenario and the investigated parameter variations.

Name Reference Scenario Alternative Parameter Variant

Coupling of system DC-coupling (5,000 EUR)
5000 full cycles until 80%
Aging parameters
remaining capacity
Funding of 30% of the BESS including
Subsidy
installation bound to 50% feed-in limit
Installation of the PV-system 2016: remuneration rate of 12.31 ct/kWh
AC-coupling incl. inverter (6,250 EUR)
3000 full cycles until 80%
remaining capacity
No funding of the BESS with standard
feed-in limit of 70%
2000: remuneration rate of 3.21 ct/kWh
Batteries 2016, 2, 14 9 of 17

5. Results and Discussion

The simulation results are presented and discussed in the following section. The reference
households (Table 3) are analyzed with regard to the influence of the parameter variants (Table 4).
Table 5 lists the resulting self-sufficiency rates for the reference households with and without BESS.
In both scenarios, the simulated BESS have remaining capacities of 56.54% and 54.69% after 20 years of
operation. The reference scenario is then investigated for the entire chosen range of household
consumption and PV-system size in order to outline the interrelation between the household’s
parameters and the BESS’ benefit. Fading battery capacity leads to decreasing self-sufficiency by
the BESS.

Table 5. Self-sufficiency rates of the reference households over the years.

Self-Sufficiency Rate with BESS/% Self-Sufficiency Rate without BESS/%

Year
Average Household Large Household Average Household Large Household
1 65.61 59.29
2 65.36 58.89
3 65.10 58.48
4 64.82 58.07
5 64.52 57.66
6 64.20 57.25
7 63.85 56.83
8 63.49 56.40
9 63.10 55.97
38.36 38.59
10 62.69 55.53
11 62.26 55.09
12 61.79 54.65
13 61.29 54.20
14 60.75 53.75
15 60.17 53.29
16 59.57 52.82
17 58.95 52.36
18 58.33 51.89
19 57.70 51.41
20 57.06 50.93

Figure 2 depicts the different parameter variants described in Table 4. Each categorical group
represents a certain parameter set. The variation from the reference scenario is named on the x-axis.
The parameter sets are chosen to illustrate the impact of each sensitivity parameter on the economics.
The lower ends of the bars show the ROI for the constant electricity price scenario. The upper ends
represent the ROI assuming the rising electricity price scenario.
The gray bars on the left of each group represent the value for the average household with a load
of 4500 kWh p.a. and a 5 kWp PV-system. The blue bars on the right of each group represent the large
household with a load of 7000 kWh p.a. and an 8 kWp PV-system.
As shown in the figure, depending on the electricity price development in the future, the ROI
achieved by the BESS in the reference scenarios range from ´24% to 26% for the average household
and ´25% to +28% for the large household.
Each scenario in Figure 2 shows a significant change of the ROI compared to the reference scenario
on the left. Hence every single investigated variation parameter strongly influences the probability of
the BESS being able to generate a positive return within a time period of 20 years.
 9 63.10 55.97
10 62.69 55.53
38.36 38.59
11 62.26 55.09
12 61.79 54.65
13 61.29 54.20
Batteries
14 2016, 2, 14 60.75 53.75 10 of 17
15 60.17 53.29
16 59.57 52.82
Choosing to purchase an additional inverter in order to AC-couple the BESS changes the ROI to
17 58.95 52.36
ranges
18
from ´32% to +8%
58.33
and from ´28% to +15% for each of the two respective scenarios. Batteries
51.89
that 19
exhibit strong 57.70
aging and last 3000 full51.41
cycles instead of 5000 until their capacity degrades to 80%
of the
20 initial value reduce
57.06 the ROI to a spectrum
50.93 of ´28% to +15% and ´30% to +15%, respectively,
compared to the reference. The scenario where the subsidy is omitted yields a decline of the ROI to
spansFigure
from ´49% to 0%
2 depicts theand from ´47%
different to +6%,
parameter respectively.
variants The retrofitting
described in Table 4. of a PV-system
Each categoricalafter it is
group
excluded from the guaranteed remuneration rate in 2020 results in a ROI-improvement to
represents a certain parameter set. The variation from the reference scenario is named on the x-axis. ranges from
to +38% and
´12%parameter
The setsfrom
are´4% to +49%
chosen respectively,
to illustrate the presuming
impact of that
eachthey are not entitled
sensitivity to a subsidy.
parameter on the
economics. The lower ends of the bars show the ROI for the constant electricity price scenario. rate,
The reduced remuneration, and ultimately the spread between electricity price and remuneration The
induceends
upper the large increase
represent the of
ROI ROI.
theassuming the rising electricity price scenario.

Figure 2. Comparison of the return on investment (ROI) for different scenarios. The intervals show
Figure 2. Comparison of the return on investment (ROI) for different scenarios. The intervals show the
the ROI-span for our electricity price scenarios. The left gray bars with dashed contours in each
ROI-span for our electricity price scenarios. The left gray bars with dashed contours in each categorical
categorical group represent the 5 kWp/4500 kWh household. The right blue bars with solid shapes
group represent the 5 kWp/4500 kWh household. The right blue bars with solid shapes show the
show the results of the 8 kWp/7000 kWh household. Each categorical group shows the different
results of the 8 kWp/7000 kWh household. Each categorical group shows the different scenarios.
scenarios. The deviations from the reference scenario are given in the description on the x-axis.
The deviations from the reference scenario are given in the description on the x-axis.

The gray bars on the left of each group represent the value for the average household with a
5.1. Coupling of the Powerwall
load of 4500 kWh p.a. and a 5 kWp PV-system. The blue bars on the right of each group represent the
largeAdding
household an additional
with a loadinverter to thep.a.
of 7000 kWh Powerwall
and an 8 in
kWporder to enable AC-coupling increases the
PV-system.
investment
As showncost in
and
thereduces
figure,the ROI by 4%
depending ontothe
18%. It may be
electricity required
price to add anin
development inverter to thethe
the future, system
ROI
in some cases;
achieved by thetheBESS
retrofitting of existingscenarios
in the reference PV-systems
rangewith a DC-coupled
from −24% to 26%BESS
for requires costly
the average rewiring.
household
This −25%
and is, however,
to +28%notforconsidered in our calculations, as we assume fixed installation costs for all cases.
the large household.
The impact of the coupling mode for the BESS also affects the overall efficiency of the system.
Charging the AC-coupled BESS with PV-produced energy requires an additional lossy conversion
step compared to DC-coupled systems. The numbers in Figure 2 show, however, that average
households would suffer greater financial losses than larger households, even though they cause
less energy throughput and, consequently, less conversion losses are expected. The 3.5 kW inverter
in the AC-coupled system is more favorable than the 8 kW PV-inverter in the DC-coupled system
in terms of energy efficiency during discharge of the BESS to meet the household’s power demand.
This indicates that an additional well dimensioned inverter may improve energy efficiency of overall
systems even though an additional conversion step is required. This is determined by the distribution
of the discharge power.

5.2. Battery Aging

A significant influence of the battery’s cycle-aging characteristics on the overall economics of
BESS can be deduced by comparison of the aging parameters shown in Figure 2: the ROI diminishes
by 4%–13% if we assume strong aging, as smaller available capacity reduces the generated savings.
A decreasing capability of the BESS has a slightly more significant effect on larger households for
two reasons:

(1) Larger energy throughput leads to stronger degradation, resulting in greater performance loss.
Batteries 2016, 2, 14 11 of 17

(2) The BESS is better utilized in the larger household. Impairment of the system’s capability
inherently translates into declining performance. In contrast, the daily load and daily PV-harvest
of the average household is often too small to fully utilize the system. The battery is often not
completely charged or discharged in the daily cycle and the deterioration affects the system’s
resulting performance to a lesser extent, as it still yields sufficient capacity in most cases.

The utilization of the BESS is illustrated in Figure 3, where the SOC-range of the BESS is shown
for a year. The blue area shows the SOC-range of each day, the gray area at the bottom illustrates the
energy content of the BESS that is not consumed within the entire day. The average household is shown
in Figure 3a, with a significant gray area at the bottom during the summer months. The load of the
Batteries 2016, 2, 14 11 of 17
average household is not sufficient to use the whole energy stored in the BESS. The system’s capability
tohousehold
store the shows
energyno surplus on the
gray area, next day
meaning thatisthe
therefore reduced.
stored energy in The BESSisinconsumed
the BESS the large every
household
day
shows no
(Figure 3b). gray area, meaning that the stored energy in the BESS is consumed every day (Figure 3b).

(a)

(b)

Figure 3. The state of charge (SOC)-range of the BESS for each day is shown in the blue area. The gray
Figure 3. The state of charge (SOC)-range of the BESS for each day is shown in the blue area. The gray
area at the bottom of each curve depicts the energy content of the BESS that is not used within the
area at the bottom of each curve depicts the energy content of the BESS that is not used within the day.
day. (a) Daily SOC-range for the average household (4500 kWh p.a. with 5 kWp); and (b) daily
(a) Daily SOC-range for the average household (4500 kWh p.a. with 5 kWp); and (b) daily SOC-range
SOC-range for the large household (7000 kWh p.a. with 8 kWp).
for the large household (7000 kWh p.a. with 8 kWp).

This indicates that smaller BESS are sufficient for the average German household under the
This
given indicates that
parameters smaller
of the BESS are
simulation. sufficient
Weniger for [2]
et al. thealso
average German
found household
smaller BESS to under the given
be optimal. A
parameters of the simulation. Weniger et al.
capacity of 6.4 kWh seems to be oversized for most houses in Germany with a rooftop PV-system. of
[2] also found smaller BESS to be optimal. A capacity
6.4 kWh seems to be oversized for most houses in Germany with a rooftop PV-system.
5.3. Subsidy and Curtailment Limit
5.3. Subsidy and Curtailment Limit
Reimbursment by subsidy directly translates to an improved ROI. On the other hand, a possibly
more Reimbursment by subsidy
severe PV-feed-in directly
limit for translates
the subsidies to aannoticable,
has improved yetROI. Oninfluence
small the otheron
hand, a possibly
the ROI—we
more
assumesevere
a 50%PV-feed-in
curtailmentlimit for thea subsidies
as being has a noticable, yet small influence on the ROI—we
requirement.
assume a 50% curtailment as being a requirement.
Lower feed-in limits cause larger waste of the PV-generated electricity. Figure 4 shows the
Lower
decrease of feed-in
the ROIlimits
due tocause largercurtailment
additional waste of the PV-generated
losses. The addedelectricity.
losses yieldFigure 4 shows
noticable the
impacts
decrease the ROI
for loweroffeed-in due to additional curtailment losses. The added losses yield noticable impacts for
limits.
lower feed-in limits.
 Reimbursment by subsidy directly translates to an improved ROI. On the other hand, a possibly
more severe PV-feed-in limit for the subsidies has a noticable, yet small influence on the ROI—we
assume a 50% curtailment as being a requirement.
Lower feed-in limits cause larger waste of the PV-generated electricity. Figure 4 shows the
decrease of 2,the
Batteries 2016, 14 ROI due to additional curtailment losses. The added losses yield noticable impacts
12 of 17
for lower feed-in limits.

Figure 4. Change of the ROI caused by curtailment limits lower than 70% for the BESS with a
Figure 4. Change of the ROI caused by curtailment limits lower than 70% for the BESS with
remuneration rate of 12.31 ct/kWh. The gray dashed curve shows the ROI change for the average
a remuneration rate of 12.31 ct/kWh. The gray dashed curve shows the ROI change for the average
household (5 kWp/4500 kWh). The blue solid curve depicts the large household (8 kWp/7000 kWh).
household (5 kWp/4500 kWh). The blue solid curve depicts the large household (8 kWp/7000 kWh).
The losses are more severe for larger PV-systems and increase with decreasing curtailment limits.
The losses are more severe for larger PV-systems and increase with decreasing curtailment limits.

The simulations are however conducted with a “greedy” control strategy that aims to maximize
the self-consumption and does not consider the effect of power curtailment. This is evaluated for the
case that only storage subsidy will introduce lower limits. If newly installed PV-systems are likewise
required to lower the feed-in limit, the economic drawbacks do not solely account towards the BESS’
savings, but the overall PV-system with battery will suffer economic losses instead.
BESS are capable of reducing curtailment losses by utilizing enhanced control algorithms that
preferrably store the PV-generated energy during peak periods. Their benefit for PV-systems will
significantly increase in this case.

5.4. Installation Time of the Photovoltaic-System

The analysis of retrofitting existing PV-systems shows the significance of the remuneration
rate on the overall economics of BESS. The discounted average gap between electricity price and
remuneration rate for a PV-system installed in 2016 accounts to 13.47 ct/kWh for a constant electricity
price and 26.02 ct/kWh in case of the rising electricity price scenario, over the depreciation period.
The discounted average gap for retrofitted PV-systems comes to 20.94 ct/kWh and 33.49 ct/kWh,
respectively. Despite no storage-subsidies taken here, the ROI of the retrofitting scenario (PV
installation in 2000, battery installation in 2020) improves by 12% in the worst case and 21% in
the best case compared to our reference scenario. The heightened curtailment limit of 70% raises
the ROI only by about 2% because of the low remuneration rate in this scenario. A price drop for
batteries is expected [41], rendering the case more beneficial in the future, however we also assume the
PV-system built in 2000 to be fully operational until 2040 in our calculations. Shorter life cycles of the
PV-system decrease the overall savings.
Retrofitting PV-systems of newer age (installed after 2000) receive the guaranteed remuneration
rate for a longer time span and will benefit less from BESS than in the discussed cases because the
price gap between electricity price and remuneration is even smaller in those cases.

5.5. Impact of the Household Consumption and Photovoltaic-System Size on the Battery Energy Storage
Systems’ Effectiveness
The ROI over all simulated PV-system sizes and annual loads are shown in Figure 5 for the
reference scenario (Table 4). The numbers in Figure 5a are calculated assuming a constant electricity
price of 28.72 ct/kWh over 20 years. Figure 5b shows the ROI for the rising electricity price scenario.
5.5. Impact of the Household Consumption and Photovoltaic-System Size on the Battery Energy Storage
Systems’ Effectiveness
The ROI over all simulated PV-system sizes and annual loads are shown in Figure 5 for the
reference
Batteries scenario
2016, (Table 4). The numbers in Figure 5a are calculated assuming a constant electricity
2, 14 13 of 17
price of 28.72 ct/kWh over 20 years. Figure 5b shows the ROI for the rising electricity price scenario.

Return on investment / %
10000

-20

30
20
-80

-20
9000

10
-70

30
-60
8000

0
-30
-30

-20
-40
7000
-50
-90

annual load / kWh

annual load / kWh

-40
large Household

20
-80
-60

6000 0 30
-2

20
-80

5000 average Household 0

-4
10

10
-70

0
-3

-60
4000

0
-50
-30
-40

-20
3000 - 40
-50

-6 0
-90

-40
-60

-80
2000 -50 -70
-60
-80
1000 -70
-80

-7 0

1 2 3 4 5 6 7 8 9 10
PV-system size / kWp
(a) (b)

Figure 5. ROI of reference scenario over all simulated PV-systems sizes and household loads. The
Figure 5. ROI of reference scenario over all simulated PV-systems sizes and household loads. The thick
thick red line emphasizes the savings threshold of the BESS with a ROI of 0%. (a) Results for the
red line emphasizes the savings threshold of the BESS with a ROI of 0%. (a) Results for the constant
constant electricity price scenario; and (b) results for the rising electricity price scenario.
electricity price scenario; and (b) results for the rising electricity price scenario.

The ROI increases with both the PV-system size and the annual load, until saturation is reached.
As the figures depict, this results in an U-shaped contour: Neither the annual load nor the PV-size
directly correlate with the economics of the BESS. Instead, both variables yield matching values for the
BESS to achieve the optimal ROI.
The decrease of the ROI with larger loads is consistent with our observation that the BESS-induced
enhancement of the self-consumed energy decreases for larger annual loads. Larger loads allow for
an augmented share of the household’s load that is directly met by the PV-produced energy instead.
If the direct-consumption exceeds a certain value, the excess PV-produced energy is not sufficient to
fully charge the BESS, hence the BESS is not completely utilized and appears oversized for the desired
application. Smaller loads on the other hand generate situations where the energy demand does not
require the entire energy stored in the BESS. In this case the BESS is not fully discharged until the next
charging period and the utilization ratio of the BESS is sparse as well.
Larger PV-systems experience more curtailment losses. The storage-subsidy lowers the feed-in
limit, hence the increased losses account to the cost of the BESS, reducing its ROI. Consequently, the
additional curtailment losses for larger PV-units will surpass the savings generated by the BESS, given
it operates with a simple “greedy” control algorithm.
In case of a constant electricity price (Figure 5a), the cost savings generated by the BESS cannot
compensate for the system’s investment cost. Hence, deploying the BESS results in financial losses,
assuming the reference scenario.
In the increasing electricity price scenario (Figure 5b), the BESS is economically favorable for
households with an annual load larger than 3000 kWh and a PV-system size of at least 3 kWp. The
majority of PV-systems below 10 kWp yield a capacity of 5 kWp and the average 4-person household
consumes more than 4000 kWh p.a., hence the average single-family house in Germany with a rooftop
solar facility gains savings by installing the Powerwall.
The development of the electricity price has a major impact on the economics of BESS. The span
between the chosen scenarios of constant nominal electricity prices and of energy prices that increase
by 4.55% p.a. exceeds 50% difference in the resulting ROI in some cases. The high impact and the
Batteries 2016, 2, 14 14 of 17

distinct uncertainty of the future electricity price need to be taken into account for economic ratings of
residential BESS in general.

6. Conclusions and Outlook

This work assesses the economic value of a residential BESS with parameters taken from Tesla’s
Powerwall. We present a comprehensive comparison of different parameters’ influence on the
economics of residential BESS that increase the self-consumption of home-owners. The results show no
distinct trend on the possible economic benefit regarding residential BESS in the price range of Tesla’s
Powerwall. The product can be an economically viable purchase now with a ROI over 25% in some of
the discussed cases with a rising electricity price. These numbers further improve in future scenarios
with lower remuneration rates and increasing electricity prices. However, some investigated scenarios
yield a negative ROI for the Powerwall, including a large proportion of scenarios with a constant
electricity price. This underlines the need to accurately analyze the situation for each installation in
order to obtain a realistic economic estimation. The high impact and distinct uncertainty of future
electricity prices need to be taken into account for such economic estimations as well.

6.1. Conclusions
The results are highly sensitive to factors beyond control, such as future electricity prices and
household loads. However moderate assumptions, such as slightly rising electricity prices and slightly
decreasing remuneration rates lead to the Powerwall being financially favorable for many households
in Germany.
Each of the investigated parameters exhibits a high impact on the total economics of BESS. Varying
both the electricity price and the remuneration rate underline the essential impact of the price gap
between them on the economics of increasing the self-consumption. We expect further increases of the
electricity price and decreases of the remuneration rate in the future, thus creating a larger gap that
will further enhance the savings of residential BESS, given that the regulatory framework does not
introduce additional cost factors for the operation of BESS.
The analysis regarding system coupling and the impact of subsidies emphasizes the significance
of total system costs. The anticipated subsidy scheme of the KfW-Bank significantly improves the
financial benefit of installing a BESS. Further subsidization and the predicted further price-decline of
batteries [41] indicate increasing benefits. Possible future taxes on self-consumption and fixed grid fees,
however, worsen the economics of BESS. Assuming a constant electricity price of 28.72 ct/kWh, the
average household would earn a neutral ROI of 0% in our calculation if the purchase and installation
of a BESS with the same parameters as the Powerwall amounts to 3,823 EUR in total.
The announced subsidy scheme is expected to require grid-relieving feed-in limits: electrical
energy storage systems are endowed with funding, provided the grid feed-in power is limited to
a certain fraction of the PV-systems peak power. We have shown that stricter limits will lead to
larger energy waste in cases where simple “greedy” control algorithms are used. Residential BESS
are technically capable of reducing the power peak injected into the grid and diminish curtailment
losses, hence providing more grid-relief, without significantly compromising the benefits to the
BESS-owner [9]. This could lead to further financial incentives for residential BESS to do so. If stricter
curtailment limits are required in the future, more advanced, predictive operation strategies that
prevent curtailment losses will be necessary.
The economic value of BESS heavily depends on the load and generation profile: a large increase
of self-consumption, by usage of storage, results in higher savings. Households with large PV-systems
and high annual load and households with little simultaneity of load and generation are especially
favorable. The results illustrate that the Powerwall, with a usable capacity of 6.4 kWh, seems to
be oversized for the average German BESS-buyer. Smaller storage at a lower price might allow for
an improved economic benefit for most German PV customers.
Batteries 2016, 2, 14 15 of 17

The generated savings are subject to the usable battery capacity, as the study on different battery
aging parameters reveals. Narrow limits of the SOC, that effectively reduce the available energy of
the storage system, interfere with the cost saving performance of BESS. This also concerns the aging
characteristics of batteries.

6.2. Outlook
Aging may also lead to an efficiency reduction of batteries, however, we assume this effect
has a small impact compared to capacity fade. Nevertheless, this effect should be analyzed in
the future for improved preciseness. The aging behavior of batteries, in general, requires further
investigation. The simulations show a capacity degradation down to 36% after 20 years for the most
battery demanding household configurations of 10 kWp PV-system size and 4500 kWh load p.a. in the
strong aging case.
Other publications report about severe accelerated degeneration of nickel manganese cobalt oxide
(NMC) based lithium-ion batteries, after reaching a certain amount of degradation [42]. Such long-term
aging effects may disrupt the conclusions about BESS’ economics drawn in this work. Auxiliary means
(such as cooling to prevent aging, hence preserving the storage’s capacity) need to be analyzed in terms
of efficiency losses and compared to the heightened capacity in order to obtain economic favorable
design rules for the thermal management of BESS.
The question of the optimal sizing of PV-systems and BESS remains open and needs to be studied,
taking into account the factors with high impact on the economics. Not only the energy capacity of
the BESS should be subject to future studies, but the sizing of the inverter and the energy efficiency
of the different coupling topologies need to be analyzed. Also, the impact of different load and
generation profile characteristics on the BESS-performance and the accompanying economics need to
be investigated further.

Acknowledgments: The authors thank the Bavarian Ministry of Economic Affairs and Media, Energy and
Technology for their financial support via the EEBatt project.
Author Contributions: Maik Naumann significantly contributed to the simulation model and aging estimation.
Ralph Ch. Karl helped with the analysis of the simulation results. Marcus Müller supported in the research of the
input data and assumptions. Holger C. Hesse and Andreas Jossen contributed to the scenario sets discussed and
the paper structure. Cong Nam Truong conducted the simulations, analyzed the data, and wrote the paper.
Conflicts of Interest: The authors declare no conflict of interest. The founding sponsors had no role in the design
of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, and in the
decision to publish the results.

Abbreviations
AC Alternating current
BESS Battery energy storage system
DC Direct current
DOC Depth of cycles
NPV Net present value
PV Photovoltaic
ROI Return on investment
SOC State of charge

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